Hit them hard:
The former head of a consumer watchdog agency Wednesday lambasted his replacement in a series of tweets for deciding to reconsider a rule aimed at protecting consumers from abusive payday lending practices.
Richard Cordray, a former Ohio attorney general who resigned in late November to seek the Democratic gubernatorial nomination, blasted the Consumer Financial Protection Bureau’s decision to reconsider payday lending rules that he had helped to craft as head of the agency. The bureau confirmed it would reconsider the rules in a statement Tuesday.
“Truly shameful action by the interim pseudo-leaders of the CFPB, announcing their plans to reconsider the payday lending rule just adopted in November,” Cordray tweeted. “Never mind many thousands of people stuck in debt traps all over the country. Consumers be damned!”
The rules, which were among the last project Cordray worked on as head of the agency, would, among other things, require lenders to determine whether a borrower could afford to repay a loan with full interest within 30 days. The rules also would limit the number of loans lenders could make to a borrower. That and other provisions outraged the payday lending industry, which argued such regulations could drive them out of business. The rules were scheduled to go into effect in August 2019.
Cordray, who was appointed by President Barack Obama, was replaced by White House Budget Director Mick Mulvaney, who is serving as acting director of the consumer watchdog agency. Mulvaney has been a critic of the rules.
Here’s a little more info:
With the Consumer Financial Protection Bureau now under Trump administration leadership, the agency is deciding whether to stop or roll back a rule to clamp down on payday lenders.
This assures renewed debate: Are payday lenders legal loan sharks? Their storefront businesses represent a $3.6 billion annual industry.
Or are they a necessity in a paycheck-to-paycheck economy, where having to fork over high interest payments to cover current bills is preferable to fighting the repo man or a landlord keen on eviction?
Under former agency director Richard Cordray, the consumer bureau established rules for borrowers and lenders. Payday companies used to require one thing before they would give a loan: a job. But under Cordray, a Democrat and Obama appointee who quit in late November and soon announced he would run for Ohio governor, the agency scheduled a series of verifications a lender would have to use.
The biggest: Could the borrower really afford to repay the loan with interest, along with his or her other monthly expenses, within 30 days?
Under the old system, regulated unevenly by states, lenders gave what they labeled as short-term loans to help borrowers get by until their next payday or the one after that. But borrowers could roll one loan into a new one, and another and another, if repayment was a problem. That means interest on the old loans was rolled into the subsequent loans, creating the equivalent of 300 percent-plus annual interest rates for some borrowers. This is why Cordray labeled the loans "debt traps."
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